Tue, May 27, 2003
Tax Cut Bill Increases Bonus Depreciation On New Planes
The final version of the tax cut legislation Jobs
and Growth Tax Reconciliation Act (H.R. 2), now awaiting President
Bush's signature, contains an increase in the bonus depreciation
percentage from 30 percent to 50 percent. NBAA and GAMA were
at the forefront of the effort to convince Congress to make this
change.
Specifics...
- A 50 percent bonus depreciation will be available for new
property (the purchaser has to be the first to use the asset)
acquired after May 5, 2003 and before January 1, 2005. (The
original 30 percent bonus depreciation provided that property had
to be purchased before September 11, 2004.)
- There must not have been a binding contract in existence before
May 6, 2003.
- The placed-in-service rules remain the same as for 30 percent
bonus depreciation.
- The property must be placed in service before January 1, 2006.
To qualify aircraft must cost more than $1 million and take longer
than 12 months to construct.
In
addition, the purchaser must use the aircraft in the trade or
business of transporting persons or property and the amount of the
cost eligible for bonus depreciation is limited to the value of the
portion of the aircraft constructed before December 31, 2004. In
the original 30 percent bonus depreciation provision, the December
31, 2004, date was September 11, 2004.
This provision accelerates when a business can take its
deduction. It does not increase the ultimate amount of the
depreciation deduction. However, the immediate write-off, combined
with extraordinarily low interest rates, make it worth considering
purchase now, rather than waiting until 2005.
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